Crypto News & Regulatory Update: May 5 – May 20, 2024

Recent Developments in Crypto Regulation: May 5 – May 20, 2024

According to a16z crypto, the latest updates in the crypto regulation landscape have been compiled and analyzed. These updates focus on the legislative, regulatory, and policy changes impacting the crypto industry globally.

🧠 Summary of Key Updates

1. The House of Representatives and the Senate passed a bipartisan Congressional Review Act resolution that aims to repeal the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) 121. This bulletin directed firms safeguarding consumer crypto to track the funds as liabilities on their balance sheets. The resolution now awaits the President's signature to take effect.
2. The Department of Justice (DOJ) charged two brothers with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering in connection with a scheme exploiting a flaw in MEV-Boost software, allowing them to fraudulently obtain $25 million in cryptocurrency.
3. President Joe Biden ordered the closure of MineOne, a cryptocurrency mining facility owned primarily by Chinese nationals, near the Warren Air Force Base in Wyoming, citing risks to U.S. national security.

🌽 Commodity Futures Trading Commission

• The Commodity Futures Trading Commission (CFTC) settled charges against Falcon Labs for failing to register as a futures commission merchant (FCM). This marks the CFTC’s first action against an unregistered FCM that facilitated access to digital asset exchanges.
• The CFTC issued a customer advisory warning students and job seekers about “money mule” scams involving fraudulent transfers into bank accounts, digital wallets, or crypto trading accounts.
• CFTC Chair Rostin Behnam indicated that the CFTC might see another cycle of enforcement actions in the next 6 to 18 months due to renewed interest in the crypto markets.

🦅 Congress

• As noted earlier, the House and Senate passed a resolution to repeal SEC SAB 121, pending the President’s approval.
• House Representative Wiley Nickel (D-N.C.) wrote to SEC Chair Gary Gensler urging the withdrawal of SAB 121, criticizing the SEC for politicizing crypto regulation.
• House Representative Sean Casten (D-Ill.) and others introduced the “Blockchain Integrity Act,” which would temporarily prohibit financial institutions from transacting with funds processed through digital asset mixers.
• Senators Cynthia Lummis (R-Wyo.) and Ron Wyden (D-Ore.) expressed concerns to U.S. Attorney General Merrick Garland about the DOJ’s interpretation of federal laws against the founders of Samourai Wallet and Tornado Cash.

⚖️ Department of Justice

• The DOJ charged a Russian national for his role in the LockBit ransomware group, which has stolen over $100 million from more than 2,000 victims.
• A New York resident pleaded guilty to fraud involving a fake cryptocurrency “virtual wallet,” soliciting over $1.3 million from investors.
• Two Chinese nationals were arrested for laundering at least $73 million through shell companies tied to crypto “pig butchering” scams.

💵 Department of the Treasury

• The Treasury issued its 2024 National Strategy for Combating Terrorist and Other Illicit Financing, including measures to disrupt illicit activities involving virtual assets.

📈 Securities and Exchange Commission

• The SEC delayed its decision on the proposed Invesco Galaxy spot Ethereum ETF.

🏛️ White House

• President Biden ordered the closure of MineOne due to national security concerns.

🇺🇸 State

🦬 Oklahoma

• Oklahoma passed a bill protecting individuals using digital assets for purchasing legal goods and self-custody. The bill also includes provisions for home digital asset mining and mining businesses.

🌍 International

💰 Bank for International Settlements

• The Bank for International Settlements published a report on the “Digitalisation of Finance,” highlighting emerging financial technologies, including crypto.

🇨🇦 Canada

• Canada’s Financial Transactions and Reports Analysis Centre fined Binance CAN$6 million ($4.3 million) for failing to register and submit required transaction reports.

🇫🇷 France

• The Autorité des Marchés Financiers reminded the public that ByBit is not authorized to provide its services in France.

🇮🇩 Indonesia

• Indonesia formed a dedicated committee to monitor the cryptocurrency industry.

🇭🇰 Hong Kong

• The Hong Kong Monetary Authority and the People’s Bank of China expanded the scope of the e-CNY pilot in Hong Kong.

🇳🇱 Netherlands

• Dutch judges sentenced Tornado Cash developer Alexey Pertsev to 64 months in prison for money laundering.

🇵🇭 Philippines

• Crypto exchange Coins.ph received approval from the Philippines’ central bank to pilot a Philippine Peso-backed stablecoin called PHPC.

🇬🇧 United Kingdom

• UK Economic Secretary Bim Afolami expressed confidence in implementing stablecoin and staking legislation soon.

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